Question

Check my work Required information The following information applies to the questions displayed below.] Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost Per Unit $6.10 $3.60 $1.40 $4.00 $3.10 $2.10 $1.10 $0.55 12. If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places and other answers to the nearest whole dollar amount.) Total manufacturing overhead cost Manufacturing overhead per unit

Answer 1

Total fixed costs:

Fixed manufacturing	4*10000	40000
Fixed Selling	3.1*10000	31000
Fixed administrative	2.1*10000	21000
		92000

Total Variable cost per unit:

Direct Material	6.10
Direct Labor	3.60
Variable manufacturing	1.40
Sales commission	1.10
Variable Admin	0.55
Total Variable cost per unit	12.75

Requirement 12:

• Total Manufacturing overhead: (12500 units * 1.4) ie Variable + 40,000 ie fixed = 57500.
• Per unit = 57500/12500 = 4.6 $ per unit.

Requirement 13:

Selling price per unit (A) = 22.10

Total Variable cost per unit (B) = 12.75

So, contribution => A-B ie 22.10 - 12.75 = 9.35

Requirement 14:

Direct Material (6.10*12000)	73200
Direct Labor (3.6*12000)	43200
Total Direct Cost	116400

Fixed Manufacturing Costs	40000
Variable manufacturing Overheads	16800
Total Indirect Cost	56800

Requirement 4:

All fixed costs are recovered in 10,000 units. So any additional unit we expend only variable costs upto the point of manufacturing costs:

Ie., (6.10+3.60+1.4)*1 = 11.10.